Portfolio management is one of the most sought-after careers in the finance industry. With high demand for this profession expected to continue in the coming years, there are various career paths, qualifications and credentials aspiring portfolio managers should consider. Earning the CFA® designation is considered to be one of the prime avenues to success in this field.
At many investment firms, earning the CFA® charter is a career path requirement to becoming a portfolio manager. The Chartered Financial Analyst® designation is widely regarded as one of the most respected and recognized investment credentials in the world. The CFA charter, which is awarded by the CFA Institute, is often labeled as the “gold standard” credential for those seeking a career in investment analysis and portfolio management.
There are a variety of ways to earn one’s CFA charter but a good place to start is by investigating the CFA Institute’s Program Partner Universities. Creighton University is one of those CFA Program Partner Universities, which signals to potential students that its finance curriculum is closely linked to the CFA curricula. Creighton’s Master of Investment Management and Financial Analysis (MIMFA) graduate degree program lies at the intersection of a rigorous graduate finance degree and the CFA curriculum. It is one of the few program partner schools that use the actual CFA curriculum in its classes. The MIMFA program provides students with the ability to earn a graduate degree from a prestigious university while completing coursework that prepares them for the rigorous CFA exams. Ultimately, the MIMFA graduate degree program prepares students for a successful career in investment analysis and portfolio management.
To get a better picture of how to become a portfolio manager or to transition into this career, and to understand the value of the CFA designation and MIMFA degree in achieving those goals, it is helpful to take a broader look at security analysis and portfolio management careers.
What do portfolio managers do?
Portfolio managers manage investment portfolios on behalf of clients, which can include individuals, foundations, endowments, and pension funds. While portfolio managers often work with a team of research analysts in performing investment analysis, they are ultimately responsible for the buy/sell decisions and financial performance of their portfolios. Research analysts are often promoted to the role of portfolio manager so working as an analyst is a common first career path step in becoming a portfolio manager.
Many portfolio managers work for investment firms, banks, insurance companies, pension funds, hedge funds or other asset management funds. They may specialize in fixed-income securities such as corporate bonds, municipal bonds and mortgage-backed securities, or they may focus on equities including small stocks, large cap stocks and emerging-market.
Portfolio managers are typically disciplined and goal-oriented but they must also have the fortitude to cope with the risk of investment losses. The average salary for portfolio managers in the United States is $124,000 a year, as reported in a recent survey, (1) with top performers earning even more.
What are the qualifications to be a portfolio manager?
According to the U.S. Bureau of Labor Statistics, for most senior finance positions such as portfolio managers, employers recommend a master’s degree and the CFA charter. (2) However, a CFA charter is not always required or an advantage for some portfolio management positions. Hedge funds, for example, tend to value work history, trading experience and academic training over credentials. Although a significant percentage of portfolio managers are promoted into that position after serving as research analysts other career entry points are from various positions in bank trust departments, insurance companies or state and local pension funds.
CFA designation and MIMFA degree
The CFA designation is increasingly becoming a requirement for those individuals seeking to become portfolio managers. The CFA Institute reports that "portfolio manager" is the most popular job title among its members, with 22% holding a portfolio management position. The second most popular job is research analyst, held by 15% of CFA Institute members. (3) The top 10 employers of CFA Institute members are JPMorgan Chase, PricewaterhouseCoopers, HSBC, Bank of America Merrill Lynch, UBS, Ernst & Young, RBC, Citigroup, Morgan Stanley and Wells Fargo. (3)
The CFA credential also typically leads to increased compensation. The CFA Society Minnesota, in a survey of investment and financial professionals in five Midwestern states in 2014, found that master’s degree holders with CFA charters averaged $216,480 in annual compensation compared with $109,000 for those with master’s degrees alone. (4) Also, according to the 2015 InvestmentNews/Moss Adams Adviser Compensation and Staff Study, the CFA charter is the designation that yields the highest financial payoff relative to other credentials.
The CFA Institute awards the credential to candidates who have passed the three rigorous and comprehensive exams and have 48 months of investment decision making work experience. Candidates also must pledge to abide by ethics rules. Earning the designation is no small feat. According to the CFA Institute, less than one in five candidates who begin the CFA Program end up finishing the program. Most agree that being adequately prepared for each CFA exam is the key step towards ultimately earning the charter.
By enrolling in a master’s degree program that is aligned with the CFA curricula, students stand to gain a significant advantage in passing the CFA exams. Students who earn their Masters along the way also have a significant advantage in the job market for portfolio managers.
Learn more about how Creighton University’s MIMFA program can deliver twice the ROI for you.